🏈 FanDuel touches down in the US

Tuesday, January 30, 2024 by Snacks
Checkin’ the 5-team parlay (Ethan Miller/Getty Images)

Checkin’ the 5-team parlay (Ethan Miller/Getty Images)

Checkin’ the 5-team parlay (Ethan Miller/Getty Images)

Checkin’ the 5-team parlay (Ethan Miller/Getty Images)

Yesterday’s Market Moves
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Hey Snackers,

Folks are voting on punny names for Minnesota’s snowplows. Since 2020, the “Name a Snowplow” contest has christened more than a dozen of the state’s 800 plows. Among this year’s finalists: Beyonsleigh and Taylor Drift.

It’s rainin’ 10-Ks: earnings szn is in full swing, and yesterday the S&P 500 closed at an all-time high. Nearly half of the index will have reported by Friday, with Alphabet and Microsoft on deck today. At its meeting tomorrow, the Fed’s expected not to budge on interest rates.

Touchdown

1. FanDuel’s parent starts trading in the US as the online sports-betting market balloons

Just in time for the Super Bowl… FanDuel owner Flutter Entertainment got a new home team. Flutter, one of the world’s biggest sports-betting companies, listed on the NYSE yesterday in its US market debut. The Dublin-based biz owns global betting brands like Betfair, Paddy Power, PokerStars, and Sportsbet. (FYI: the gambling giant is also listed on the London Stock Exchange, where it IPO’d in 2019.)

  • New arena: Flutter execs say the US is a “natural home.” FanDuel is the US’s online sports-betting leader with 40%+ market share. Now its trading in the States alongside #1 rival DraftKings.

  • High stakes: FanDuel and DraftKings control ~70% of the US online sports-betting market. While rivals like MGM and Caesars are smaller players, competition is heating up.

Sports gambling’s big W… Betting on sports has boomed in the US ever since the Supreme Court struck down a federal ban on it in 2018. The American Gaming Association projected that sports betting topped $100B last year. With mobile sports gambling now legal in over half of states, big players have gone all in with star-studded endorsements. DraftKings tapped celebs like Kevin Hart, Ludacris, and Tony Hawk for its Super Bowl ad last year.

THE TAKEAWAY

A bigger field can fit more players… US sports betting has taken off, but it’s still illegal in California and Texas, the two most populous states. It means there could still be a long runway for growth, and not just for the likes of FanDuel and DraftKings: casino owner Penn Entertainment and its new ESPN-branded sportsbook aim to make up 20% of the US sports-betting market by 2027.

Dusty

2. Amazon’s $1.4B Roomba-quisition gets stuck under the antitrust couch

Cliff sensors won’t save you now… After backlash from US and EU antitrust regulators, Amazon abandoned its $1.4B purchase of Roomba maker iRobot. The deal, announced in 2022, would’ve been Amazon’s fourth-largest acquisition. After the news, iRobot said it would lay off nearly a third of its staff, and the stock was down 60% in the past month. It’s just the latest deal to get clogged by antitrust scrutiny as big tech companies struggle to vacuum up smaller players. Amazon may’ve been preempting what it saw as a losing game:

  • Warning lights: Along with a looming EU veto, the FTC had reportedly planned to sue to block the iRobot deal. Regulators were concerned by Amazon’s potential to shut out robo-vacuum rivals through its online storefront.

  • Clean break: Amazon, which has to pay iRobot a $94M termination fee, has a silver lining in the failed acquisition: it won’t acquire iRobot’s recent losses ($500M since mid-2021).

Swingin’ and missin’ at checkout… isn’t typical for Amazon. iRobot would’ve joined Amazon’s connected-home product line, which the company’s built up over the past decade through acquisitions of camera co Blink, security co Ring, and WiFi co Eero. Not to mention other big buys like Whole Foods, MGM, and One Medical. Now Lina Khan’s FTC and the Biden admin have created a harsher M&A environment for the tech industry.

THE TAKEAWAY

Antitrust is tired of tech picking unripened fruit… Global watchdogs have grown increasingly wary of “killer acquisitions” (deals where a company absorbs a potential competitor). The environment is far from the one that let Facebook snag Instagram about a decade ago. Amid regulatory scrutiny, last month Adobe bailed on a $20B acquisition of Figma; last year Meta sold Giphy for a $260M loss; and in 2022 Nvidia ditched plans to buy chip rival Arm.

What else we’re Snackin’

  • FakeOut: X said it blocked searches for “Taylor Swift” after explicit AI-generated fake images of the singer went viral. The White House said Congress should take legislative action as deepfake concerns grow.

  • Loss: 3M said it was on track to settle 300K+ lawsuits that alleged it sold earplugs that left many wearers with hearing damage. The maker of N95s and Post-its agreed to pay $6B in the largest mass tort in US history.

  • Adazon: Amazon told Prime subscribers they’ll have to pay $3/month more if they want to keep their Prime Video ad-free. Streamers including Netflix are not so gently nudging customers to more lucrative commercial-stuffed plans.

  • NotGrande: A Hong Kong judge ordered Chinese real-estate behemoth Evergrande to liquidate. The biz owes $300B+ and stopped paying its debt more than two years ago, but it’s unclear whether the ruling will hold up in mainland China.

  • Oleato: Starbucks is now serving up its controversial olive-oil-infused coffee in all US stores. Premium bevs like specialty cold brews have been a sales sweet spot for Starbucks, which reports today.

Snack Fact of the Day

A third of all S&P 500 companies report earnings this week

Tuesday

  • Earnings expected from Alphabet, Electronic Arts, GM, JetBlue, Match Group, Microsoft, Mondelez, Pfizer, and Starbucks

Authors of this Snacks own shares of Alphabet, Amazon, GM, Match Group, Microsoft, Nvidia, and Starbucks

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